RISK FACTORS

Length: 3-7 pages, single spaced, 11 or 12pts font. Footnotes must be smaller at 9 or 10pts using the same font.

In answering the questions below, you will need to read an article that I and Prof Francis Tapon wrote. The article is available at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2182295

Concentrate on the introduction and results sections. Figures 13, 14, Table 1, 2 summarize our findings for Canada. Similar figures are available for the 4 other countries. You will also need to do your own search online from "credible" sources to answer some of the questions. Please cite your sources.

1. Risk measures. In this course you have considered standard deviation as your measure of portfolio risk.

a. Why it is important to consider different risk measures?

b. Which risk measures would you consider in the analysis of your own portfolio given your preferences as an investor?

2. How many stocks. Based on the article linked above.

a. For an average Canadian investor how many stocks are recommended in his or her portfolio to reduce his diversifiable risk by 90%?

b. How does this recommendation depend on financial market conditions?

3. How many stocks. Based on your research of external credible sources online.

a. How many stocks on average do Canadian investors actually hold in their portfolios and how off they are from the recommended portfolio size?

b. How many stocks on average do US and UK investors actually hold in their portfolios? How is this figure different from the Canadian investors?

c. Same as question 3.b but for the Japan, Australia, European countries or any other countries you may find a survey online.